The Green Party would put a moratorium on new dairy farms operating in New Zealand and slug farmers with a nitrate pollution levy to help reduce water pollution.
Leader James Shaw says the causes of water pollution, not just the symptoms, need to be treated to make New Zealand's waterways more sustainable.
"We're going to have to put the brakes on dairy and reduce the number of cows on our farms," he said on a visit to an organic property in Wairarapa.
"I know that that is a controversial point but there is no point throwing money at curing the symptoms of poor water quality if we don't tackle the cause."
Mr Shaw said the levy would initially be set at $2 per kilogram of nitrate per hectare of farm, but farmers would pay no more than 5 percent of their pre-tax profit.
It would be rolled out "pretty rapidly" in the first term of a Green government, he said.
Companies such as Fonterra already require suppliers to capture nitrate data and Mr Shaw said they would work with those companies to access the information.
It's estimated the levy would raise $136.5 million that would be reinvested to help farmers make their businesses more sustainable.
It would allow an extra $20m a year to be added to the Sustainable Farming Fund, the creation of a $70m Transformational Farming Partnership Fund and an additional $16m over three years to Landcare Trust.
Farmers will be encouraged to consider alternatives to traditional dairy, including sheep and deer milk.
Mr Shaw said by putting a levy on pollution, rather than on individual cows or the water itself, farmers would be able to avoid paying the charge by reducing their pollution.
"It frees up farmers to work out for themselves how they want to reduce that pollution," he said.
National leader Bill English said existing nitrate limits, set by regional councils, were tried and tested and remained the best way forward.
"The fact is the people in the environment, the councils, the farmers, they're more committed to the sustainability of any particular waterway than anyone else and if you give them limits, show them the objectives, they will go for it and they will make the most sensible choices," he said.
Mr English said a levy would be channelled through bureaucracy and officials who thought it was a good idea to tell farmers how to run their farms.